Another turn was added to the speculation over when the Bank of England will start to cut interest rates by the unexpectedly strong GDP showing this morning.
Britain's economy grew 0.2% year on year and 0.6% sequentially in the first quarter of 2024, its fastest rate for two years and eclipsing market forecasts of 0.4%.
With the economy ticking along and employees seeing their take-home pay going up, why risk throwing a spanner in the works with a rate cut?
Analysts at US bank JP Morgan suspect that might just be what the BoE is planning after yesterday's interest rate-setting meeting.
A more dovish tone in the Bank of England’s interest rate statement opens the door to a June rate cut, analysts at the US bank believe.
This shift in mood came despite growth recovering, underlined by today’s strong GDP number and several key inflation measures that are still running hot.
Wage growth is one of those and another pay hike from Lidl for its staff underlines it is an issue that is not going away easily.
Views remain split, but JP Morgan believes the BoE is trying harder to line up a June cut despite firmness in the price data making that shift feel awkward.
“We stick with our call for an August cut for now, as a lot of data are still to come, but the odds vs June look more evenly balanced and the onus is now more on the data to talk them out of easing.”